May 6, 2010

Sprint Rolling Out New Text-Centered Plan

by ssavage

Sprint Nextel Corp.'s Virgin unit plans to start selling new cellphone service plans next week in order to market towards the number of young people that prefer to use their phone for text messaging rather than talking.

The plan, which differs from most U.S. cellphone plans that focus on voice services, is a part of a new Sprint strategy to hone in on narrow segments within the fiercely competitive prepaid cell market where customers pay for calls in advance without committing to a long-term contract.

Dan Schulman, the head of Sprint's prepaid business, said the new offer is the first to target 18 to 24-year-old budget conscious cellphone users that text more and than make phone calls.

"(For these people) voice is a technology of last resort. It's not the way they want to communicate," Schulman, who was Chief Executive of Sprint wholesale customer Virgin Mobile USA before Sprint bought the business late last year, told Reuters.

Sprint will also have a $40 plan that includes 1,200 call minutes and unlimited texts and Internet usage. A $60 plan will include unlimited calls.

Roger Entner, a cellphone expert at market search group Nielsen, said the $25 plan would most likely appeal to teenagers that "cannot or do not want to be" on a family plan.

"The new Virgin plan is really a strong play for the texting youth segment," Entner told Reuters, estimating that about 50 million people are texters who avoid making phone calls.

Sprint's rivals in prepaid include Leap Wireless, MetroPCS Communications and Tracfone, a unit of America Movil.

Sprint's Boost unit shook up the prepaid market last year when it unveiled a $50 per month unlimited voice and data plan that helped it steal customers from rivals and force their prices down.

According to Entner, the new text-centric plan could put pressure on other prepaid operators to follow suit.

"Who you'll hurt is the guys who will not respond to it and want to sell to the teens and twenties segment," Entner added.